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New research on performance evaluation from Harvard Business School faculty on issues including public agencies' use of rigorous impact evaluations, the downside of evaluating candidates solely on past job performance, and how to make performance reviews more productive and less distasteful.
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Management Lessons from the Sinking of the SS El Faro

Re: Joseph B. Fuller

Captain Michael Davidson of the container ship SS El Faro was determined to make his planned shipping trip on time—but a hurricane was approaching his intended path. To succeed, Davidson and his fellow officers had to plot a course to avoid the storm in the face of conflicting weather reports from multiple sources and differing opinions among the officers about what to do. Over the 36-hour voyage, tensions rose as the ship got closer and closer to the storm. And there were other factors compounding the challenge. The El Faro was an old ship, about to be scrapped. Its owner, TOTE Maritime, was in the process of selecting officers to crew its new ships. Davidson and some of his officers knew the company measured a ship’s on-time arrival and factored that into performance reviews and hiring decisions. When the ship ultimately sunk on October 1, 2015, it was the deadliest American shipping disaster in decades. But who was to blame for the tragedy and what can we learn from it? Professor Joe Fuller discusses the culpability of the captain, as well as his subordinates, and what it reveals about how leaders and their teams communicate under pressure in his case, "Into the Raging Sea: Final Voyage of the SS El Faro."

Employee Performance vs. Company Values: A Manager’s Dilemma

Re: Nitin Nohria

The Cold Call podcast celebrate its five-year anniversary with a classic case study. Harvard Business School Dean Nitin Nohria discusses the dilemma of how to treat a brilliant individual performer who can't work with colleagues. Open for comment; 0 Comments.

Nominal and Opportunity Effects of Managerial Discretion

by Wei Cai, Susanna Gallani, and Jee Eun Shin

This study of field data from a Chinese manufacturing company explores the consequences of subjective performance evaluations leading to bonuses and penalties. Results may help practitioners improve the effectiveness of incentive systems.

How a New Leader Broke Through a Culture of Accuse, Blame, and Criticize

Re: Amy C. Edmondson

Children’s Hospital & Clinics COO Julie Morath sets out to change the culture by instituting a policy of blameless reporting, which encourages employees to report anything that goes wrong or seems substandard, without fear of reprisal. Professor Amy Edmondson discusses getting an organization into the “High Performance Zone.” Open for comment; 0 Comments.

Are Super Stretch Goals Only for the Very Young?

by James Heskett

SUMMING UP: Super stretch goals can produce audacious results, but they are best left to companies agile enough to execute then, readers say. Open for comment; 0 Comments.

rTSR: When Do Relative Performance Metrics Capture Relative Performance?

by Paul Ma, Jee-Eun Shin, and Charles C. Y. Wang

Managers are increasingly evaluated based on relative performance metrics, particularly relative total shareholder returns (rTSR). This paper finds that the majority of firms that tie CEO performance-based contracts to rTSR do a remarkable job of filtering out the systematic risk in TSR. However, a significant portion of firms make relatively poor choices in the design and selection of rTSR, a result of weak governance and an overreliance on compensation consultants.

Women Receive Harsher Punishment at Work Than Men

by Michael Blanding

Women caught in misconduct were 20 percent more likely to be fired and 30 percent less likely to find new employment in the financial services industry, reports new research by Mark Egan and colleagues. Open for comment; 0 Comments.

How Companies Can Increase Market Rewards for Sustainability Efforts

by Rachel Layne

There is a connection between public sentiment about a company and how the market rewards its corporate social performance, according to George Serafeim. Is your company undervalued? Open for comment; 0 Comments.

How Cost Accounting is Improving Healthcare in Rural Haiti

by Carmen Nobel

The cost of healthcare in rural Haiti was found to vary widely, even inside the same health organization. A pioneering cost accounting system co-developed by Robert Kaplan was called in to determine the cause. Open for comment; 0 Comments.

To Motivate Employees, Give an Unexpected Bonus (or Penalty)

by Michael Blanding

Susanna Gallani finds that employees can be more motivated by the anticipation of a reward or punishment than the actual payoff. Open for comment; 0 Comments.

In Search of Organizational Alignment Using a 360° Assessment System: Evidence from a Retail Chain

by Carolyn Deller, Susanna Gallani, and Tatiana Sandino

This study assesses a values-based 360° performance measurement system implemented at an Indian retail chain that led to improvements on financial performance, but not on desired non-financial dimensions.

Assessing the Quality of Quality Assessment: The Role of Scheduling

by Maria Ibanez and Michael W. Toffel

Accurate inspections enable companies to assess the quality, safety, and environmental practices of their business partners, and enable regulators to protect consumers, workers, and the environment. This study finds that inspectors are less stringent later in their workday and after visiting workplaces with fewer problems. Managers and regulators can improve inspection accuracy by mitigating these biases and their consequences.

Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods

by Dina Pomeranz

Dina Pomeranz examines the use by public agencies of rigorous impact evaluations to test the effectiveness of citizen efforts.

Leadership Lessons of the Great Recession: Options for Economic Downturns

by Sandra Sucher & Susan Winterberg

In the new case study “Honeywell and the Great Recession,” Sandra Sucher and Susan Winterberg explore employer tradeoffs when a downturn hits: conducting layoffs vs. orchestrating furloughs. Plus: Video interviews with Honeywell CEO Dave Cote. Open for comment; 0 Comments.

Why Unqualified Candidates Get Hired Anyway

by Anna Secino

Why do businesses evaluate candidates solely on past job performance, failing to consider the job's difficulty? Why do university admissions officers focus on high GPAs, discounting influence of easy grading standards? Francesca Gino and colleagues investigate the phenomenon of the "fundamental attribution error." Closed for comment; 0 Comments.

Better by the Bunch: Evaluating Job Candidates in Groups

by Maggie Starvish

The key to avoiding gender stereotyping in the hiring process lies in evaluating job candidates as a group, rather than one at a time. So says new research by Iris Bohnet, Alexandra van Geen, and Max H. Bazerman. Open for comment; 0 Comments.

Building a Better Board

by Carmen Nobel

While corporate board members take their jobs more seriously than ever, they are not necessarily as helpful or effective as they could be, says HBS senior lecturer Stephen Kaufman. He recently sat down with HBS Working Knowledge to discuss what he considers to be the biggest practical issues facing boards today. Key concepts include: Board directors may not give an honest assessment of the company because they fear reprisal from the CEO or the other board members. In accurately evaluating a CEO's performance, board members must get feedback from other employees at the company, who possess insight into day-to-day operations that the directors do not. Closed for comment; 0 Comments.

What’s to Be Done About Performance Reviews?

by Jim Heskett

What can we do to make performance reviews more productive and less distasteful? Should their objectives be scaled back to just one or two? Should they be disengaged from the determination of compensation and, if so, how? Closed for comment; 0 Comments.